Bed Bath & Beyond Inc BBBY

We don’t plan any material change to our $23.50 fair value estimate for no-moat Bed Bath & Beyond after incorporating third-quarter results into our model. While recent results knocked a few dollars off our intrinsic value, the reduction of our long-term tax rate forecast to 23% (from 27%) offset the downside. Quantitative proof of progress in the company’s turnaround largely escaped the period, with comparable sales falling 7% (and the namesake business down 10%), deleverage of selling, general, and administrative costs (by 320 basis points to 37%), and an adjusted EPS loss of $0.25 (versus guidance of $0.00-$0.05). A bright spot was the gross margin, which expanded 50 basis points to 35.9% and 360 basis points over 2019, helped by pricing and mix. The firm offered a weaker-than-expected full-year outlook for $7.9 billion in sales (from $8.1 billion-$8.3 billion prior) and EPS of negative $0.15-$0 (from $0.70-$1.10).